Postal Services Secret Sauce: 4 Strategies for Postal Delivery Success

The move to digital formats and the rise of e-commerce has transformed how postal services operate. Areas where the postal service has a monopoly, such as First Class Mail (letters, postcards, etc), periodicals and marketing mail are rapidly declining (The total volume mail across all classes fell by 46% between 2008 and 2023). At the same time, parcel delivery, where postal providers compete with last-mile delivery companies, has grown by more than 300 percent in the US over the same period. 

As the lines between last-mile delivery logistics companies and postal service blur, postal services come under threat. Postal operators can modernize and optimize their operations to stay competitive. They hold several advantages, and making the most of them can mean a bright future for the postal industry. 

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General vs. specialized delivery services

One significant difference lies in how postal services and specialized last-mile delivery companies handle parcels throughout their operations. General postal services typically process a high volume of standardized parcels alongside regular mail, leading to a more generalized handling approach with fixed sorting processes and equipment designed for average-sized packages. 

This gives postal infrastructure and workflows a huge advantage when accommodating large volumes of mail and parcels, but they cannot typically provide highly specific care requirements, such as handling hazardous materials, refrigeration, oversized items, or a strict chain of custody. These are often best left to specialized last-mile delivery companies.

Dynamic, static and hybrid routes

Postal services traditionally operate on fixed routes that remain stable for months or even years, while last-mile delivery services adapt their routes daily based on demand. To remain competitive, postal services need to implement dynamic routing capabilities while maintaining their established fixed routes where beneficial.

Route Optimization software is crucial to generate dynamic route plans that adapt to daily requirements. These systems incorporate real-time factors such as traffic conditions, delivery time windows, and vehicle capacity constraints to create efficient routes on the fly. 

The key is to use advanced routing algorithms that can hybridize fixed and dynamic routes and manage the scale of postal services. These algorithms can help postal operators optimize their operations and become more efficient and competitive with last-mile providers.

Delivery Time Windows and Customer Expectations

Traditional postal delivery operates within broad time windows, typically promising delivery within a day without specific timing commitments, or offering self pickup from a designated spot. Last-mile delivery services often must meet precise delivery windows, sometimes as narrow as half an hour, while managing customer preferences and real-time communication. 

However, those differences do not always come into play these days. And they are compounded by the many e-commerce sites that promise same-day or next-day delivery, which means both pickup and delivery need to be scheduled dynamically. 

Optimization software helps manage these complex scheduling requirements by incorporating time window constraints, customer preferences, and real-time delivery status updates. And advanced systems can dynamically adjust routes when delays occur, to minimize its operational impact. Also, sending automated notifications to customers.

This creates a change in customer expectations - who now want faster delivery, more accurate tracking information about their package, and easy communication with whoever delivers it - regardless of whether it is a postal or last-mile company. Post companies are expected to rise to the standard set by last-mile delivery providers, and provide a better, more transparent service.

Obligations for Coverage and Failed Delivery

One fundamental distinction between postal services and specialized last-mile delivery companies lies in their mandate and obligations. 

Postal services typically operate under universal service obligations, requiring them to serve every address within their designated territory, including remote rural areas and less profitable regions, often at standard rates. 

Conversely, specialized last-mile delivery companies have the flexibility to choose their service areas, often concentrating operations in densely populated urban and suburban regions where delivery economics are more favorable (and where they can build close fulfillment centers). This selective coverage approach can leave gaps in service availability, particularly in rural or remote areas where delivery costs would be high, and postal services can thrive. 

Postal services also have established protocols for failed deliveries, often leaving notices and storing items at local post offices for pickup. Last-mile delivery operations face higher costs and complexity with failed deliveries. And with an average cost of $17.78 per failed delivery, and an estimated 5% of all last-mile deliveries failing according to one source, this is substantial. 

Technological solutions can minimize failed deliveries through easy communication, predictive analytics, and smart scheduling. Optimization systems can manage delivery times and facilitate the coordination of alternative delivery options.

As last-mile delivery companies and postal service providers encroach more and more into each other's territory, the delivery landscape creates new opportunities for postal operators to bring their unique advantages developed through decades of operational excellence to bear. With extensive networks of already operational routes and a deep understanding of local markets, postal organizations are ideally positioned to thrive in this changing environment.

To this end, postal delivery and parcel operations should:

• Incorporate traditional postal routes and dynamic delivery networks to serve multiple customer segments
• Utilize their extensive data and operational experience to create more efficient delivery solutions
• Partner strategically with e-commerce platforms to maintain their distinct competitive advantages
• Offer premium last-mile services that match or exceed new market entrants
• Lead innovation in areas where postal expertise is particularly valuable, such as rural delivery and nationwide coverage

The key is not just bridging operational differences, but enhancing postal strengths through strategic technology adoption. This approach will allow postal operators to maintain their core identity while expanding into new service areas.